Omaha daily bee., 1887-07-01
An Instructive Contrast.

An Instructive Contrast
Referring to the collapse of the Fide1-
ity bank Of Cincinnati. which produced
only slight tremor in financial circles
from which they have now entirely re.
covered the Cleveland Lcdder makes an
instructive contrast of the general effects
OF this failure with those produced by the
collapse just thirty years ago of the Ohio
Life and Trust company of Cincinnati.
That event was the forerunner of the
disastrous panic of 1857, the most calami.
tous and far-reaching this country has
ever experienced. Those who are old
enough to clearly remember that crisis,
will have no difficulty in recalling facts
Of their experience illustrative of the
UNIVERSAL depression, distrust and
gloom which sctteled down upon every
portion of the country. There
was no confidence anywhere or in any
thing. The rickety banks of that time
went down by the score. Every day re-
corded a host of failures of merchants
and manufacturers. Enterprises of all
kinds came nearly to a standstili, and
idle labor drifted about hopelessly in
quest of employment. Almost every
savings bank in the country experienced
mands of depostors with great difficulty,
nearly or quite all of them taking advan.
tage of their privilege to protect them.
selves. The paralysis was general, and
there was not branch of business or in.
dustry that did not suffer. The chief
cause of this state of affairs was the inse-
cure character of the bank system of the
country. A few of the states had sound
banking laws under which the business
was done on proper basis, and the
banks of such states, with perhaps few
exceptions, survived the shock and strain
of the crisis; but very generally the banks
were wildcat institutions. with little or
no substantial foundation, which flooded
the country with notes which had not a
farthing of security to rest upon. In the
west particularly a great volume of this
Unsecured paper had been emitted, and
had permeated to greater or less de-
gree the channels of finance and trade
in every quarter of the country. When
the shock came the worthless institu-
tons went inevitably to wreck
and reputation. carrying down to ruin
thousands who had been induced to place
confidence in them. The loss to the peo.
pie III this worthless currency amounted
to many millions of dollars.
But the situation now, as our contemp-
orary remarks, is very different. The
failure of a bank causes no concern to
the note holder, because he knows the
note is finally protected by security i'll
the hands of the government, and is just
as sound and serviceable for all its pur-
poses as if tho bank issuing it were now
doing business with million of surplus
in its vaults. No one has troubled him.
self to examine his currency to ascertain
If there are any notes of the
Fidelity bank among it. and any
number of these notes would be received
at any bank or business house with no
more question or doubt respecting their
value than would attend the receipt of
an equal amount of the issues of the
wealthiest and soundest bank in the
country. The responsibility for the Sc
curity and redemption of every bank
note issued is with the government, and
no conditions or circumstances can re-
move that responsibility. This, with
other wise and sound provisions of the
national banking law for the protection
of the people, have given this country the
best monetary system ever devised, and
there could hardly be any greater mis-
fortune befall the country than Its apan-
donment and return to that state
of affairs which existed thirty years ago
and to which was chiefly due the dis
astrous panic of that time. Certainly no
man familiar with the financial history
Of that period. and still less any one who
then did business or performed labor,
will be found among the opp onents OF
the present system in favor of restora-
ton of the conditions which it sup
planted.